Government of Montenegro Ministry of Transport and Maritime Affairs Podgorica, April 2013

I RAIL INFRUSTRUCTURE Rehabilitation of railway line Bar – Vrbnica, according to the study Italferr: Technical and Financial Study for the rehabilitation of the Belgrade – Bar railway line Railway Link Čapljina – Trebinje - Nikšić Railway Link Pljevlje - Bijelo Polje – Berane-border with Kosovo Restructing of railway system of Montenegro - Privatization

Ralway line Bar - Vrbnica The Belgrade-Bar railway line (Е-79) was constructed and put into operation in phases, from 1958 to 1976. The Belgrade-Bar railway line has significant international and regional importance, especially for development of business affairs with Italy and South East Europe. The line (Route 4) represents direct connection between ports located on the South Adriatic coast, Port of Bar and City of Belgrade – Pan European Corridors X and VII (Danube River) - connecting to TEN-T, as well as connection with all countries of Central and East Europe, considering the strategic position of the Serbian capital city.

Current Situation The electrified single line Bar –Vrbnica has a length of 167. 4 km and was opened to traffic in 1976. The line is designed to support speeds ranging from 75 km/h to 120 km/h. Railway border crossing station: Bijelo Polje and Prijepolje . Technical and Financial Study for the rehabilitation of the Belgrade – Bar railway line is completed (Italferr, November 2010)

51,6 km of tunnels and galleries 15.6 km of bridges and viaducts

Project Technical Elements Object Number Length Tunnel 106 51,6 km Bridge 107 15,6 km Other - landslides 7 1 km Rock falls 28 4,9 km Avalanches 8 0,9 km

Project Justification EIRR 1,6%, Time savings 5 hours, Decreased costs for ordinary and daily maintenance by 30% Removed bottlenecks bridges, tunnels, landslides, rock falls and avalanches, Improved safety and security 35%, Modal shift and intermodality 2 new terminals, Ecology sensitive areas protection - National Park Skadar lake (9,717 km)

Project Justification The financial analysis gives an overview of the financial flows of investment, the operating costs and the revenues over the lifetime of the project and it calculates the rate of return on the investment (IRR) and the net present value (NPV). The financial analysis focuses on the costs and revenues from the perspective of: infrastructure manager, operator of passenger trains and operator of freight trains. The result was positive for both countries. The economic analysis encompasses more than just the considerations of the financial returns of the project, such as user benefits and external costs (air pollution, CO2 emissions and accidents). The economic results of the cost-benefit analysis are presented also in terms of benefit-cost ratio (B/C ratio), and are extremely positive for both countries. Following a final sensitivity analisys, the Study demonstrated that the proposed investment is financial viable and economically beneficial.

Financial Analysis Total 138.971.050 Montenegro Year Million € TYPE OF WORKS MONTENEGRO CIVIL ENGINEERING INFRASTRUCTURE SUBSTRUCTURE AND PERMANENT WAY 58.310.810 BRIDGES 19.328.100 TUNNELS 14.101.980 LANDSLIDES ROCKSLOPES AVALANCHES 1.486.850 6.359.340 2.506.900 HYDRO-ENGINEERING WORKS 465.110 STATION BUILDING AND RELATED FACILITIES 17.396,880 TOTAL 1 119.955.970 ELECTRICAL INFRASTRUCTURE ELECTRIFICATION 5.242.950 SIGNALING 13.677.600 TELECOMMUNICATIONS 94.540 TOTAL 2 19.015.090 TOTAL 138.971,060 Montenegro Year Million € Short-term scenario to 2015 2011 12.705.315 2012 18.304.644 2013 18.847.112 2014 25.212.945 2015 26.228.705 Total 1 101.298.721 Medium-term to 2020 2016 11.879.075 2017 7.677.780 2018 6.915.490 2019 6.021.650 2020 5.178.334 Total 2 37.672.329 Total 138.971.050

What we have Regular maintenance of infrastructure and traffic regulation € 6,8 - 10 mil per year (Budget) loan from: EBRD – 10 € mil, EIB - € 34 mil IPA 2007, 2009, 2010 and IPA III component - € 18,7 mil

What we will do from EBRD (III) in 2013 International tenders lasts till September 2013, and the works will be carried out in 2014: WORKS – GENERAL REPAIR – Substructure reconstruction along the sections from Kolašin to Kos, and reconstruction of secondary station tracks in passing point Kos (estimated value: EUR 5m); WORKS – RECONSTRUCTION OF 5 TUNNELS No. 187, 190, 193, 205 and 206 on the part of railway line Kos –Trebješica – Lutovo (estimated value: € 4 mil); WORKS - RECONSTRUCTION OF 3 CULVERS and regulation of water in 4 bridge (estimated value: € 500,000.00); DESIGN DOCUMENTS Preparation of design documentation for reconstruction of 18 tunnels along the railway line Vrbnica – Bar (estimated value: EUR 450,000.00) REVISION – Technical control of prepared design documentation for reconstruction of 18 tunnels (estimated valu: EUR 50,000.00).

What we will do from EIB loan Preparation of tenders for works of bridge Trebaljevo on the railway line Vrbnica –Bar (end of 2013) Preparation of tenders for works of 15 steel bridges on the railway line Vrbnica –Bar (end of 2014) What we plan to tender for IPA projects 12 slope repair the railway Vrbnica –Bar (December 2013); Dismantling new substation Trebješica (September 2013).

What we need Main repair (rehabilitation) of Vrbnica – Bar line, the part - Kolasin – Podgorica line (63,1 km) Repair Kos Trebješica (6,74 km) - 5.9 mil € Repair Trebješica-Lutovo (9,97 km) - 7.2 mil € Repair Lutovo-Bratonožići – (8,77 km)- 6.3 mil € Repair Bratonožići-Bioče (9,67 km) -7.2 mil € Repair Bioče-Podgorica (14,48 km)- 8.3 mil € Repair of station track in station Podgorica (1,48 km)- 9.8 mil €

Main repair (rehabilitation) of Vrbnica – Bar line, the part - Podgorica – Bar line (51,4 km)… Repair-Podgorica-Golubovci -7.2 million € (9,5km) Repair Golubovci Zeta 5.4 million € (7,8 km) Repair Zeta-Virpazar 6.9 million € (8,76 km) Repair Virpazar-Sutomore 8.7 million € (11,07 km) Repair Sutomore-Bar 5.3 million € (7,85 km) Repair station track in station Bar 13.5 million € (1,27 km) The plan is an arrangement of border stations Bijelo Polje and station Tuzi , decorating stations Bar, with special emphasis on the connection with thePort of Bar. The estimated value for the station Bijelo Polje 2.5 mil € The estimated value for the station Tuzi 0.5 mill € The estimated value for the station Bar with special emphasis on the connection with the Port of Bar 10 mill €

Railway Link Čapljina – Trebinje - Nikšić According to the signed Memorandum of joint actions on development of project-study documentation for the connection of Montenegro and Bosnia and Herzegovina by rail, the Spanish company "Inocsa Ingenieria SL" finished project “Provision of a preliminary decision, and the study of spatial - planning documents for regional Čapljina -Trebinje-Nikšić“ The project was done a preliminary traffic study, preliminary studies on environmental impact assessment, preliminary cost estimates, and preiliminary design solution Line in lenght 249 km in three scenario I scenario – double track railway line – 1 bil 450 mil EUR II scenario – one track railway line plus coridor for second track – 1 bil 90 mil EUR III scenario – one track railway line – 809 mil EUR Next step: Feasibility study

Railway Link Čapljina – Trebinje - Nikšić

Railway Link Pljevlje - Bijelo Polje – Berane-border with Kosovo In July 2012. year published tender for Feasibility Study for the construction of new railway Pljevlja-Bijelo Polje-Berane-border with Kosovo Total cost expected 250 million € for lenght around 60 km for solution Pljevlja – Ravna Rijeka Benefits Socio-economic development of the territory of Montenegro and Kosovo Increase in capillary network Economic development of the northern part of Montenegro Uniform distribution of traffic flows of the respective territories Division types of traffic flows on road and rail The creation of new ideas and new international and local trade Connecting to TEN-T through route 4 Improving the competitiveness of the domestic transport industry Increase the quality of transport services Stimulation of economic growth through more efficient and cheaper transport Improve the safety and security, in order to preserve human lives, values and preserving state resources Minimizing negative impacts of development of transport and transport infrastructure on the environment and society

Railway Link Pljevlje - Bijelo Polje – Berane-border with Kosovo

Restructing of railway system of Montenegro The Tender Commission for privatization of Transport Companies accordance to the Decision of Council for Privatization and Capital Projects and Government Restructuring Strategy of the Railway of Montenegro via public tender of: “Maintenance of railway infrastructure”, which will be separated from “Railway Infrastructure of Montenegro Jsc - Podgorica”, by joint investment into regular and investment maintenance of railway infrastructure, or sale state packages of share with the conclusion of many years of maintenance contracts, and Awarding the concessions for railway stations and lands which are integral part of “Railway Infrastructure of Montenegro Jsc - Podgorica”, Company Egis International has been selected as an Advisor for. Tender are planed to launch in end of 2013. Same procedure are for privatization of Montecargo

The ownership structure 20